Markets advanced on Monday as trade optimism surged following reports that the United States and China are set to extend their mutual tariff pause by another 90 days. This move helped lift overall risk sentiment, pressuring safe-haven assets like gold and the US Dollar. Gold dropped below $3,350 amid diminished geopolitical risk, while major currencies such as the British Pound and Euro capitalized on the weakened USD. The Australian Dollar held steady as traders awaited further clarity from upcoming trade negotiations, and the EUR/USD pair held firm above 1.1750 after a constructive US-EU trade accord.
Gold Forecast (XAU/USD)
Current Price and Context
Gold has slipped toward $3,335–$3,340 as easing trade tensions and a firmer USD suppress safe-haven flows. Technicals confirm a bearish tilt with key support zones near $3,310. Unless risk sentiment reverses or dollar weakness re‑emerges, expect price to remain range‑bound or drift lower heading into the FOMC and US jobs data.
Key Drivers
Geopolitical Risks: Trade tensions ease amid progress on US–EU and US–China tariff negotiations, undermining gold’s safe‑haven demand and pressuring prices lower
US Economic Data: Robust US data—especially labour and GDP figures—supports a firmer USD, adding headwinds to bullion
FOMC Outcome: Markets anticipate no immediate Fed rate cuts; the upcoming meeting embeds caution, contributing to sideways or bearish trading sentiment
Trade Policy: The US–EU trade agreement (15% tariff framework) plus expected extension of the US–China tariff pause dampen gold’s appeal further
Monetary Policy: No near‑term Fed easing expected; low yields and improving risk sentiment reduce gold’s attractiveness
Technical Outlook
Trend: Short‑term bearish; gold has broken the rising trendline support at $3,342 and trades below the 21‑day SMA/50-day SMA
Resistance: $3,346 – $3,360 zone (trendline resistance, moving average cluster) acts as critical ceiling. Beyond that, $3,370 and $3,380 look like next hurdles
Support: Near‑term support sits around $3,325–$3,330; a break below $3,310 would expose the $3,283 July low and possibly the $3,254 zone
Forecast: Expect consolidation in the $3,330–$3,345 range. A drop toward $3,310 looks likely unless the USD weakens sharply or trade conflict re‑escalates. Strong break above $3,360 would be needed to signal recovery
Sentiment and Catalysts
Market Sentiment: Sentiment remains cautious to bearish. Traders have adopted a ‘sell on strength’ bias, with gold reaching near-oversold RSI readings (~30), yet lacking strong bullish conviction
Catalysts: Key drivers include the outcome of the FOMC meeting (Wed), US non-farm payrolls (NFP), and any twists in US–China trade negotiations. Further easing in the tariff horizon or disappointment in US data could prompt renewed support for gold; conversely, stronger USD or hawkish Fed tones would push it lower.
USD/CNY Forecast
Current Price and Context
The U.S. and China look set to extend their tariff pause through mid-November, easing immediate trade tension risks and supporting a broader risk-on shift in markets. While major breakthroughs remain unlikely at this stage, the extension appears to serve as a stabilizing placeholder as both sides continue to negotiate longer-term dispute resolution.
Key Drivers
Geopolitical Risks: Tensions ease as China and the United States are expected to extend their mutual tariff pause by another 90 days, avoiding the reactivation of punitive measures and preserving the path for ongoing diplomacy.
US Economic Data: Indirectly supports the truce narrative; stable data encourages both parties to avoid disruptions that could destabilize global growth.
FOMC Outcome: While not directly linked, the Fed’s current neutral stance may complement the trade pause by maintaining a stable macro environment.
Trade Policy: The tariff pause, set to expire on August 12, is now poised for a 90-day extension as per reports from SCMP. Talks in Stockholm mark the third round of technical negotiations, underscoring progress despite unresolved issues.
Monetary Policy: No changes in direct response to trade updates, though easing trade tensions reduce the urgency for stimulus from either central bank.
Technical Outlook
Trend: Risk-on trend favored; equity markets and risk-sensitive currencies react positively to reduced trade uncertainty.
Forecast: The extension is expected to stabilize markets through mid-November, encouraging risk appetite while deferring trade-related volatility.
Sentiment and Catalysts
Market Sentiment: Broadly positive. Markets interpret the extension as a de-escalation step, promoting confidence across global risk assets.
Catalysts: Official confirmation of the 90-day extension, results of the Stockholm negotiations, updates on fentanyl-related tariff issues, and the potential scheduling of a Trump–Xi summit.
AUD/USD Forecast
Current Price and Context
The Australian Dollar is finding support amid renewed trade optimism and stabilizing risk sentiment. Trading around 0.6560–0.6570, AUD/USD reflects favorable positioning ahead of Australian CPI data and the US FOMC meeting. Expect sideways-to-positive near-term movement, with key levels at 0.6600 resistance and 0.6520 support.
Key Drivers
Geopolitical Risks: Risk sentiment has improved on expectations that the US and China will extend their tariff truce, reinforcing positive momentum for commodity-linked currencies like AUD.
US Economic Data: Resilient US indicators bolster the USD, but clarity around inflation and employment data will influence sentiment ahead of US non-farm payrolls.
FOMC Outcome: The Federal Reserve is widely expected to leave rates unchanged at 4.25%–4.50% in the July meeting, delaying cut expectations until September.
Trade Policy: Market participants await outcomes from the Stockholm meeting between U.S. and Chinese officials. Reports suggest a 90-day extension to the tariff pause, benefitting risk assets and commodity currencies.
Monetary Policy: The Reserve Bank of Australia is closely watching Q2 CPI data (due Wednesday); any surprise could delay expected RBA rate cuts.
Technical Outlook
Trend: Short-term bullish; AUD/USD remains in an ascending channel and is trading above the nine-day EMA, with RSI holding above 50 indicating positive momentum.
Resistance: Near-term resistance zone sits around 0.6570–0.6600, with a potential push toward 0.6624, the recent peak.
Support: Immediate support is at the 9-day EMA (~0.6550), with broader support from the 50-day EMA (~0.6520–0.6530).
Forecast: Unless trade talks stall or US data surprises hawkishly, AUD/USD may consolidate within 0.6520–0.6600, with modest upside bias if risk sentiment remains stable.
Sentiment and Catalysts
Market Sentiment: Cautiously optimistic. Investors are favoring risk assets and commodity-linked currencies, though traders remain wary ahead of key economic releases.
Catalysts: Watch for confirmation of the US–China tariff extension, Sweden (Stockholm) summit outcomes, CPI print from Australia, and US non-farm payrolls and FOMC commentary.
GBP/USD Forecast
Current Price and Context
GBP/USD is trading near 1.3440, rebounding toward the mid‑1.3400s amid an improved global trade tone. The recent US‑EU trade deal has heightened risk appetite, weighing on the USD’s safe‑haven demand, while traders await key US macro and Fed developments.
Key Drivers
Geopolitical Risks: Improved global trade sentiment—via U.S.–EU and U.S.–China trade developments—undermines safe-haven flows into USD and supports GBP.
US Economic Data: Markets await upcoming reports such as Q2 GDP, PCE, and NFP which will shape USD dynamics and GBP/USD direction.
FOMC Outcome: The Fed decision Wednesday is highly anticipated; no change is expected, but rate-cut signals or dovish rhetoric could diminish the USD further.
Trade Policy: The U.S.–EU tariff deal and pending U.S.–China negotiations reinforce a risk-on backdrop, creating tailwinds for GBP/USD.
Monetary Policy: With the BoE likely to signal a rate cut in August amid persistent inflation and softer UK data, GBP gains may be limited.
Technical Outlook
Trend: Mildly bullish. GBP/USD is maintaining levels above the daily chart’s 100-day EMA, indicating positive momentum on recent upside moves.
Resistance: Key upside targets include 1.3550, then 1.3588 (July 24 high), and 1.3681–1.3725 zone.
Support: Initial support resides around 1.3365 (July 16 low), with further layers near 1.3330 and 1.3236.
Forecast: In absence of fresh bullish catalysts, GBP/USD is likely to consolidate between 1.3360–1.3550, with upside caps unless broader risk sentiment intensifies.
Sentiment and Catalysts
Market Sentiment: Cautiously optimistic. GBP/USD trades with modest gains and limited conviction, reflecting cautious positioning ahead of major data and central bank events. � stays afloat above the monthly swing low.
Catalysts: Key drivers include the Fed’s decision and communication, U.S. economic releases (GDP, PCE, NFP), updates on U.S.–EU and U.S.–China talks, and incoming UK macro data.
EUR/USD Forecast
Current Price and Context
EUR/USD is holding firm above 1.1750, buoyed by renewed optimism following the recently inked US–EU trade agreement. Improved risk sentiment continues to weigh on the US Dollar’s safe‑haven appeal, supporting the euro amid mildly firmer global trade dynamics.
Key Drivers
Geopolitical Risks: Relief over a potential escalation in US–EU trade tensions helps diminish safe-haven flows into USD, especially with the tariff truce signaling broader de‑risking in global markets.
US Economic Data: Mixed US macro prints bolster the case for sideways USD action; investors are watching upcoming inflation, GDP, and jobs data for signs on Fed policy bias.
FOMC Outcome: With no change expected at the July meeting, markets are sensitive to tone around rate cuts—any dovish commentary could further pressure USD.
Trade Policy: The newly announced US–EU trade agreement effectively reduces tariff risks for European exporters, lifting sentiment toward the euro and risk-sensitive assets.
Monetary Policy: The ECB remains on hold but emphasizes that reduced trade uncertainty may allow future dovish guidance, especially if inflation proves sticky.
Technical Outlook Trend: Modestly bullish. EUR/USD is holding above its 50-day EMA, supported by steady momentum and breaking out of a recent consolidation zone.
Resistance: Primary resistance lies near 1.1790–1.1800, followed by the 1.1850 zone.
Support: Immediate support is located at 1.1750, with a secondary layer around 1.1715–1.1700. A break below would invite retests of 1.1670 and the 200-day EMA.
Forecast:Expect a consolidation within 1.1750–1.1800. A sustained break above 1.1800 could open the door toward 1.1850–1.1900. Conversely, failure to hold 1.1750 may trigger a pullback toward 1.1700.
Sentiment and Catalysts
Market Sentiment: Risk sentiment remains constructive, with investors favoring euro and European equities amid fading trade shock risk and a weakening USD.
Catalysts: Key upcoming events include US non-farm payrolls, FOMC commentary, European inflation and PMI data, and any follow-up trade clarification or escalation noise from US–EU and US–China channels.
Wrap-up
Trade optimism dominated Monday’s session as the anticipated extension of the US-China tariff pause fueled risk-on sentiment across global markets. This pressured the US Dollar, allowed risk-sensitive currencies to gain traction, and dragged gold prices lower. While the Australian Dollar remained subdued ahead of upcoming negotiations, the Pound and Euro advanced amid broader USD weakness. With key data releases and policy commentary ahead, market participants remain focused on trade diplomacy and its ripple effects across major asset classes.
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